Gridstore Becomes HyperGrid as HCI Market Crunch Continues

Gridstore, a hyper-converged infrastructure company, is no more as it has combined forces with DCHQ, a container-focused software company, to form HyperGrid, which purports to be a "HyperConverged Infrastructure-as-a-Service" company.

That's a lot of buzzwords, so let's break it down.

Gridstore was a hyper-converged infrastructure company, putting compute and storage into a single box and then connecting them together in a scale-out cluster, much like Nutanix, VMware VSAN, SimpliVity, Cisco Hyperflex, EMC VxRail, Atlantis Computing, Yottabyte, Scale Computing HC3, Pivot3, and many more. Gridstore's main point of difference was that it used Microsoft's Hyper-V hypervisor technology when pretty much everyone else was using either VMware's vSphere hypervisor, or the open-source KVM (or a derivative).

A couple of years ago, this was big deal because basically no one else was using Hyper-V for hyperconverged, and the Hyper-V platform itself was somewhat under-developed. Still, it was good enough for many purposes, and I recall talking to ex-CEO George Symons once about zigging while everyone else was zagging. Symons was clearly comfortable with being different. Fellow analyst Howard Marks and he once destroyed a Gridstore cluster with thermite in the interests of science. There's video!

How times have changed.

Hyper-converged infrastructure is just one way to deploy physical kit, while most of the action is happening in the application layer. Containers are the new VMs, and HyperGrid's DCHQ-based platform (now called HyperForm) is solidly container-based. Hypervisors are becoming commodities -- much to VMware's chagrin -- and HyperGrid will support vSphere, KVM, and Hyper-V as well as bare-metal deployments and cloud-based environments. The promise of moving workloads from site-to-site, regardless of the underlying physical gear, is an attractive proposition to many customers.

Meanwhile, VMware VSAN has been seeing tremendous growth, Nutanix has grown strongly (despite its much-delayed IPO), and several other large players have introduced or OEM'd their own solutions (Cisco has Hyperflex, and also resells SimpliVity, Dell resells Nutanix, EMC has the VSAN based VxRail, etc.). A plethora of other players duke it out for small chunks of market share.

Faced with increasingly tough conditions, we're already seeing consolidation activity that many, including me, have expected for some time.

"If you talk to customers, commoditized infrastructure and commoditized hypervisors is where they're going," said HyperGrid Chairman and CEO Nariman Teymourian. "Their view is 'I need to build and deploy applications to allow my business to be more competitive.'"

"I feel like the hyper-converged market today doesn't address that part of the business," he said.

Atlantis Computing threw in the towel last month, announcing it would retreat to its core VDI market. HCI startup Pivot3 merged with storage maker Nexgen in January 2016 to inject some flash into its offering. A vicious fight for market share will clearly favour the better capitalized players, and in my view this is just the beginning of a market consolidation that has been due for some time.

I think HyperGrid is right to exit the pure-play HCI market and move into a software-based service subscription aimed higher up the stack. Containers look to provide many of the benefits, and challenges, of the early virtual-machine market, and while there are going to be lots of mistakes made as the technology matures, it's a major growth area with no clear market leaders.

It's hard to see a route to IPO for anyone but Nutanix, or possibly SimpliVity, and there just aren't enough buyers looking for acquisition-based growth to pick up the rest of the companies in this space. Outside of one or two companies laser focused on a niche -- like Scale Computing and Yottabyte -- the choices are exit, merge, or die.